Around £10 million of the Queen's money was put into funds in the Cayman Islands and Bermuda by the Duchy of Lancaster, which provides the monarch with an income.

The practice is not illegal, and Buckingham Palace has insisted no tax was avoided, but critics will questions whether the head of state should be involved in such activities.

Shadow Chancellor John McDonnell said: "These are deeply worrying revelations. Despite all the Government’s claims of cracking down on tax dodgers, this evidence confirms that tax avoidance is clearly continuing on an industrial scale. Either the Prime Minister or the Chancellor needs to explain how this scandalous behaviour has been allowed to go on unaddressed for so long and what action is to be taken now.

"Here we have proof that we have seen a lot of bluster from the Government about tackling tax avoidance but no real action. Only last week the Government was blocking Labour amendments to the Finance Bill to bear down on this abuse.

"Every pound avoided in tax by the super-rich is a pound desperately needed by our NHS, our schools and our caring services."

Lib Dem leader Vince Cable said: "Tax should not be an optional extra for the global elite. Citizens who dutifully pay their taxes need confidence that the system is fair. But the Paradise Papers suggest that a small number of wealthy individuals have been able, entirely legally, to put their money beyond the reach of the Exchequer."

He added: "Given these revelations, including news that Conservative donors benefitted from these arrangements, we need a parliamentary select committee to investigate fully who decided what and why. In particular, we need the release of all government papers dealing with the decision not to clamp down on off-shore tax havens. Only in this way can we ensure there is full public confidence in the tax system.”

Meg Hillier, chair of the Commons public accounts committee, said: "British taxpayers will be rightly outraged by the content of these disclosures. Every pound moved offshore to avoid paying tax deprives public services of vital funds.

"The Government talks tough about clamping down on aggressive tax avoidance but once again we see HM Revenue & Customs being out-manoeuvred. HMRC must investigate the very worrying allegations arising from this leak."